The family home of murdered drug kingpin Carl Williams will be auctioned on Saturday after his former wife failed in her bid to block the sale.

Roberta Williams went to the Supreme Court to stop the sale by the Australian Taxation Office to pay off a $959,714 tax debt owed by her former father-in-law George Williams' estate, linked to money he made importing drugs.

Williams was relying on revelations about the supergrass lawyer, known as Lawyer X, who she argued in affidavits to the court had represented 'family members' including Carl and George Williams.

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The family home of murdered drug kingpin Carl Williams will be auctioned on Saturday after his former wife failed in her bid to block the sale

Roberta Williams went to the Supreme Court to stop the sale by the Australian Taxation Office to pay off a $959,714 tax debt owed by her former father-in-law George Williams' estate, linked to money he made importing drugs (pictured: Roberta Williams (centre) and daughter Dakota (second right) arriving at Melbourne Supreme Court on December 14)

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The original debt proceedings were dropped, but fresh ones were brought in 2011 and in 2013 he agreed to mortgage his Primrose Street, Essendon property to the Commonwealth for $576,000 to cover the debt.

With interest, the figure is now just shy of a million dollars.

Ms Williams sought the injunction as executor of George's estate.

Her daughter with Carl, Dhakota Williams, was bequeathed the house in her grandfathers' will.

Justice Stevens said Ms Williams' lawyers had argued the conduct of Lawyer X tainted the settlement agreement, but had presented no evidence of her involvement in any of the dealings involving the ATO.

The family home of murdered drug kingpin Carl Williams will be auctioned on Saturday after his former wife failed in her bid to block the sale (pictured: Carl Williams leaving Melbourne Supreme Court, May 2004)

ustice Stevens said there were arguments for blocking the sale, including that it had been Dhakota's family home since birth (pictured: Carl Williams congratulated by a friend after being granted bail at Melbourne Magistrate's Court, December 2003)

He said if evidence existed the court would have expected it be presented.

Justice Stevens said there were arguments for blocking the sale, including that it had been Dhakota's family home since birth.

She was evicted by the ATO in September and it was revealed she and Ms Williams have been couch surfing since.

But he decided that it was not appropriate to hold off on the sale until after a royal commission into Lawyer X's dealings - set to begin next year - because it would be at least 12 months before a finding.

By that time the debt would likely outgrow the property value more than it does now.

He also said if Lawyer X was found to have had wrongful dealings in respect of the settlement, Ms Williams would be able to seek damages that would ameliorate the financial loss.